SCHD Retirement Income Calculator

Retirement Income Calculator

Retirement Income Results

Required Investment for Income Goal

$920,716

Projected Portfolio at Retirement

$563,277

Monthly Income at Retirement

$1,834

Based on projected dividend yield at retirement

Investment Gap

$357,439

Additional investment needed to meet income goal

Additional Monthly Contribution Needed

$1,215

To reach your retirement income goal

What is SCHD Retirement Income Planning?

SCHD retirement income planning involves using the Schwab U.S. Dividend Equity ETF (SCHD) to generate reliable passive income during retirement. As a dividend-focused ETF with a history of consistent dividend growth, SCHD can be an effective vehicle for creating sustainable retirement income.

The core strategy is to build a substantial position in SCHD during your working years, then use the dividend payments as income during retirement. This approach offers several advantages:

You don't need to sell shares to generate income, preserving your principal
SCHD's focus on quality dividend stocks with growth potential helps combat inflation
Dividends have historically been more stable than market prices during downturns
The qualified dividend treatment offers tax advantages compared to ordinary income

How This Calculator Works

This calculator helps you determine how much you need to invest in SCHD to meet your retirement income goals. It factors in:

Your desired monthly income in retirement
Current and projected dividend yield of SCHD
Expected dividend growth rate, which historically has been 11.44% for SCHD over the last 5 years
Effects of inflation on your income needs
Compounding effects of dividend reinvestment during accumulation phase

SCHD's Dividend History

Understanding SCHD's dividend growth history helps you make more accurate retirement projections. SCHD has demonstrated consistent dividend growth since its inception in 2011.

Year	Annual Dividend	Growth Rate
2025	$1.02	3.0%
2024	$0.99	12.23%
2023	$0.89	3.77%
2022	$0.85	13.90%
2021	$0.75	10.88%

5-Year Average Dividend Growth Rate: 11.44% (Calculated 2020-2025)

SCHD Retirement Income Strategies

The 4% Rule with SCHD

The traditional 4% withdrawal rule can be modified when using dividend ETFs like SCHD. Since SCHD's current yield is 3.91%, you can almost entirely rely on dividends without principal depletion.

For a $1 million SCHD portfolio, the annual dividend income would be approximately $39,100
Dividend growth helps offset inflation over time
Minimal need to sell shares during market downturns

Dividend Growth Strategy

This approach focuses on SCHD's dividend growth potential to provide increasing income throughout retirement, helping combat inflation without depleting principal.

With SCHD's historical dividend growth of 11.44%, income can potentially double every 6-7 years
Start with a lower withdrawal rate (e.g., 3%) and let dividend growth increase your income
Preserves purchasing power throughout a potentially 30+ year retirement

SCHD Core with Income Satellites

Build a core position in SCHD for stability and growth, then add satellite positions in other income-producing assets for diversification and higher current yield.

Core: 50-70% in SCHD for quality and growth
Satellite options: JEPI for higher yield (7.85%), REITs, preferred stock ETFs, or bond funds
Balances immediate income needs with long-term growth potential

Bucket Strategy with SCHD

Implement a time-segmented bucket approach to manage different phases of retirement with SCHD as the growth component.

Bucket 1 (1-2 years): Cash for immediate needs
Bucket 2 (3-10 years): Mix of bonds and high-yield dividend ETFs
Bucket 3 (10+ years): SCHD for long-term growth and rising income

Tax Considerations for SCHD Retirement Income

Account Type Considerations

The tax treatment of your SCHD dividends depends on which type of account holds your investments. Strategic placement can significantly impact your after-tax retirement income.

Taxable Accounts

SCHD dividends are generally qualified dividends taxed at preferential rates (0%, 15%, or 20% depending on your tax bracket)
May be more tax-efficient than accounts receiving ordinary income tax treatment
No required minimum distributions (RMDs)

Tax-Advantaged Accounts

Traditional IRA/401(k): Tax-deferred growth, but withdrawals taxed as ordinary income
Roth IRA/401(k): Tax-free withdrawals in retirement, including all dividend growth
Traditional accounts subject to RMDs at age 73

Tax-Efficient Withdrawal Strategies

Implementing tax-efficient withdrawal strategies can help maximize your after-tax income during retirement when using SCHD as an income source.

Account Withdrawal Sequencing

Consider this general withdrawal sequence for tax efficiency:

Required minimum distributions (RMDs)
Taxable accounts (taking advantage of lower capital gains rates)
Tax-deferred accounts (Traditional IRA/401(k))
Tax-free accounts (Roth IRA/401(k))

Tax Bracket Management

Fill up lower tax brackets each year through strategic withdrawals from different account types. This may include:

Taking partial Roth conversions in lower-income years
Harvesting capital gains when you're in the 0% capital gains tax bracket
Balancing dividend income from taxable accounts with withdrawals from tax-deferred accounts

IRMAA Considerations

Be mindful of Income-Related Monthly Adjustment Amount (IRMAA) thresholds that can increase your Medicare premiums. SCHD dividends in taxable accounts will count toward these income thresholds.

Frequently Asked Questions